The U.S. Small Business Administration has released a form of one page which makes it simpler to request forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the most recent stimulus legislation.
Congress approved the COVID-19 relief package last month that included $284 billion of financing to small businesses that needed loans. The money was intended to offset the economic impact of the coronavirus pandemic. The legislation required that the SBA issue simplified forms within the first 24 hours after the bill’s passage into law. This was to simplify the process of applying for forgiveness. Additionally, it included conditions that encourage community banks to lend more particularly to minority-owned businesses who were unable to obtain loans in the past.
“The Small Business Administration met the requirement to issue the one page form for loan forgiveness under the PPP within 24 days of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued updated forms.”
First Draw PPP Conditions for loan forgiveness
Aci Loan Forgiveness – For those who qualify First Draw PPP loans are qualified to forgive loans. This applies when the loan payment is made within an 8– to 24 week period.
- This is also true for employee compensation and the.
- The proceeds of the loan can be used to pay for expenses for payroll or other eligible expenses.
- A minimum of 60% of the funds go to expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans given to borrowers who meet the criteria are eligible for complete loan forgiveness, if within the 8to 24 week time period after loan payment:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an identical manner.
- The loan proceeds are used on payroll and other eligible expenses; and
- A minimum of 60% of the proceeds are used to pay for payroll expenses
- How do I apply for loan forgiveness , and when to apply
After all loan’s proceeds have been used the borrower is eligible to be granted forgiveness. Borrowers can request forgiveness at any point up to the date at which the loan matures. Borrowers who don’t request forgiveness within 10 months of the expiration date of the loan are eligible to receive the loan payment from their PPP lender.